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India tells Vodafone to pay up $2 billion or assets will be seized

The Indian tax authorities have sent a notice to Vodafone Plc, which is engaged in arbitration with the government in a tax case, threatening to seize assets if the company did not pay up $2.1 billion in taxes, according to Bloomberg report.

Deputy commissioner of income tax, Anil Sant, has sent the notice on February 4 to Vodafone International Holdings BV, according to the report.

The tax pertains to a transaction Vodafone did in 2007, in which it acquired Hutchison's 67 percent stake in its telecom JV in India for about $11 billion. The deal was carried out through companies that are not based in India.

The income tax authorities slapped a basic capital tax demand of Rs 7,990 crore on the transaction. Though, Vodafone won a court battle in the case, the government later changed the law to retrospectively apply the tax on such transactions.

Though, the law was brought in by the former UPA government, there were expectations that the NDA government under Narendra Modi, touted to be business-friendly than the predecessor, would put an end to the tax terrorism. However, the latest development in the Vodafone case indicates that the NDA too might be going the UPA way.

The central government's move assumes significance as Vodafone's international arbitration proceedings against India are presently on in the case.